Hasbro Posts Wider First-Quarter Loss
Toy maker Hasbro Inc. reported a wider loss for the first quarter and said the second quarter would be challenging as the company braces for a falloff in “Star Wars” merchandise sales.
The first-quarter loss of $4.9 million, or 3 cents a share, for the three months ended April 2, was blamed largely on foreign currency fluctuation and new accounting rules for stock options. In the same quarter last year, Hasbro lost $3.7 million, or 2 cents a share.
Expenses related to stock-based compensation reduced results by 2 cents a share in the latest quarter. If similar expenses had been included a year earlier, the loss for that period would have been 4 cents a share.
Revenue rose to $468.2 million from $454.9 million with a strong performance from Hasbro’s North American operations, the company said. Currency fluctuations reduced revenue by about $9 million in the first quarter.
Analysts surveyed by Thomson Financial were expecting a loss of 1 cent a share, including stock-options expenses, on revenue of $430 million.
“While we feel good about the business for the full year, it’s worth noting that the second quarter will be challenging,” said Alfred Verrecchia, president and chief executive of the Pawtucket, R.I.-based company.
Verrecchia said the company expected a continued decline in merchandise sales linked to “Star Wars: Episode III Revenge of the Sith,” which was released in theaters last year.
Hasbro’s North American operations posted a 7% increase in revenue to $310.3 million, driven by board games and toy lines such as Nerf, Supersoaker and Littlest Pet Shop. Operating profit at the division rose by 3% to $4.77 million.
The company is the second-biggest toy maker in the United States, behind Mattel Inc., which last week posted higher first-quarter earnings and reported sales of $793.3 million.
Verrecchia said the company expected to ship products this year related to its licensing deal with Marvel Comics, which gives the company toy rights to characters including the Hulk, Captain America and Spider-Man.
He said the company was looking forward to the anticipated releases of the “Spider-Man 3” film and the live-action “Transformers” movie, both of which are due out in 2007.
Shares of Hasbro fell 11 cents to $20.82.
